GREENVILLE, S.C.–(BUSINESS WIRE)–ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the fourth quarter and fiscal year ended June 30, 2020. All results in this release reflect continuing operations only unless otherwise noted.
Fourth Quarter Summary:
- Net sales: $636.5 million, down 22% year-over-year
- Gross profit: $74.1 million, down 23% year-over-year
- GAAP operating loss of $(113.4) million; non-GAAP operating income of $8.2 million
- Net loss from continuing operations of $(108.9) million, which includes non-cash goodwill and asset impairment charges of $120.5 million
- GAAP and non-GAAP diluted EPS of $(4.29) and $0.19 per share, respectively
- Classified divestitures of products distribution business outside of the United States, Canada and Brazil (“Divestitures”) as assets held for sale at June 30, 2020 and reported as discontinued operations in the financial results
- Generated strong operating cash flow of $74.0 million during the quarter
“While the COVID-19 pandemic had a significant impact on our quarterly financial results, I am proud of how our teams have executed and the value we deliver to our suppliers and customers,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “We’ve taken the necessary actions to strengthen our balance sheet, improve our cost structure, and continue to drive investments in our higher-margin, VAR cloud platform and agency business.”
Quarterly Results
Net sales totaled $636.5 million for the fourth quarter of fiscal year 2020, down 22% year-over-year, or down 19% for organic growth. The reduction in net sales is primarily due to the impact of the COVID-19 pandemic, which resulted in lower demand from customers. For the Intelisys master agency business, net sales increased 15% year-over-year for the fourth quarter of fiscal year 2020.
For the fourth quarter of fiscal year 2020, operating income decreased to $(113.4) million, and non-GAAP operating income decreased to $8.2 million. As of the annual goodwill impairment test date of April 30th, the Company’s revenue projections were lowered, primarily as a result of the COVID-19 pandemic. As a result, the Company recognized pre-tax, non-cash goodwill and asset impairment charges of $120.5 million. This accounting adjustment does not involve any cash outflow.
On a GAAP basis, net income for the fourth quarter of fiscal year 2020 totaled $(108.9) million, or $(4.29) per diluted share, compared to net income of $16.0 million, or $0.62 per diluted share, for the prior-year quarter. Non-GAAP net income totaled $4.9 million, or $0.19 per diluted share, compared to $19.3 million, or $0.75 per diluted share, for the prior-year quarter.
At June 30, 2020, ScanSource had cash and cash equivalents of $29.5 million and total debt of $218.7 million for continuing operations. Borrowings for discontinued operations totaled $28.2 million. In the fourth quarter of fiscal year 2020, the Company generated $74.0 million of operating cash flow.
Full Year Results
For fiscal year 2020, net sales decreased 6% to $3.0 billion, or a 5% year-over-year decrease on an organic basis. Fiscal year 2020 GAAP operating income decreased to $(65.0) million, largely from the non-cash goodwill and asset impairment charges, and non-GAAP operating income decreased to $78.9 million.
On a GAAP basis, net income for fiscal year 2020 totaled $(79.2) million, or $(3.12) per diluted share, compared to net income of $64.9 million, or $2.52 per diluted share for the prior year. Non-GAAP net income totaled $52.0 million, or $2.05 per diluted share, compared to $87.7 million, or $3.41 per diluted share for the prior year.
Discontinued Operations
On August 20, 2019, ScanSource announced plans to divest its products distribution businesses outside of the United States, Canada and Brazil. ScanSource continues to operate in its digital distribution business in these geographies. These plans are part of a strategic portfolio repositioning to align investments with higher-growth, higher-margin businesses. On July 23, 2020, ScanSource signed an agreement to sell its products distribution business located in Mexico, Colombia, Chile, Peru and its Miami-based export operations to Intcomex. The Company is actively working on sales opportunities for its divestitures in Europe and the UK.
At June 30, 2020, the Divestitures were classified as assets held for sale and recorded as discontinued operations. Net loss from discontinued operations for the fourth quarter of fiscal year 2020 includes a $88.9 million non-cash loss on held for sale classification to establish a valuation allowance and $13.7 million for non-cash impairment charges.
COVID-19 Update
Our top priority during the COVID-19 pandemic is protecting the health and safety of our employees. We implemented travel restrictions and transitioned our employees, where possible, to a remote working environment. Nearly all office-based employees around the world are working remotely. We have taken a number of measures to ensure our teams have the flexibility and resources they need to stay safe and healthy. We are experiencing higher costs from these safety measures to protect our employees. We are continuing to provide the high level of customer service our partners expect from us.
Initiated Expense Reduction Plan
In July 2020, ScanSource initiated a $30 million annualized expense reduction plan to address the business impacts of the COVID-19 pandemic and prepare for the next phase of growth.
Webcast Details and CFO Commentary
At approximately 4:15 p.m. ET today, a CFO commentary, as a supplement to this press release and the Company’s conference call, will be available on ScanSource’s website, www.scansource.com (Investor Relations section). ScanSource will present additional information about its financial results in a conference call today, August 31, 2020, at 5:00 p.m. ET. A webcast of the call will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.
Safe Harbor Statement
This press release contains “forward-looking” statements, including the Company’s Divestitures and the impact of the COVID-19 pandemic, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated results, including, but not limited to, the impact of the COVID-19 pandemic on our operations and financial condition, the Company’s ability to complete the Divestitures on acceptable terms or to otherwise dispose of the operations, changes in interest and exchange rates and regulatory regimes impacting the Company’s international operations, the impact of tax reform laws, the failure of acquisitions to meet the Company’s expectations, the failure to manage and implement the Company’s organic growth strategy, credit risks involving the Company’s larger customers and suppliers, termination of the Company’s relationship with key suppliers or a significant modification of the terms under which it operates with a key supplier, the decline in demand for the products and services that the Company provides, reduced prices for the products and services that the Company provides due both to competitor and customer action, changes in the Company’s operating strategy, and other factors set forth in the “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended June 30, 2020, filed with the Securities and Exchange Commission. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), the Company also discloses certain non-GAAP financial measures, which are summarized below. Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition costs, restructuring costs and other non-GAAP adjustments.
Net sales on a constant currency basis, excluding Divestitures and acquisitions: The Company discloses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods and excluding the net sales from Divestitures, as well as acquisitions prior to the first full year from the acquisition date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.
Income Statement Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP net sales, non-GAAP gross profit, non-GAAP operating income, non-GAAP other expense, net, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share (non-GAAP diluted “EPS”). Non-GAAP results exclude amortization of intangible assets related to acquisitions, changes in fair value of contingent consideration, acquisition and divestiture costs, impairment charges and other non-GAAP adjustments. Non-GAAP metrics are useful in assessing and understanding the Company’s operating performance, especially when comparing results with previous periods or forecasting performance for future periods.
Return on invested capital (“ROIC”): Management uses ROIC as a performance measurement to assess efficiency in allocating capital under the Company’s control to generate returns. Management believes this metric balances the Company’s operating results with asset and liability management, is not impacted by capitalization decisions and correlates with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company’s profitability on a basis more comparable to historical or future periods.
ROIC assists management in comparing the Company’s performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. ROIC is calculated as adjusted EBITDA over invested capital. Adjusted earnings before interest expense, income taxes, depreciation and amortization (“Adjusted EBITDA”) excludes the change in fair value of contingent consideration, in addition to other non-GAAP adjustments. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of ROIC provides useful information to investors and is an additional relevant comparison of the Company’s performance during the year.
These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company’s non-GAAP financial information to GAAP is set forth in the Supplementary Information (Unaudited) below.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is at the center of the technology solution delivery channel, connecting businesses and providing solutions for their complex needs. ScanSource sells through multiple, specialized routes-to-market with digital, physical and services offerings from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, telecom and cloud services. ScanSource enables its sales partners to create, deliver and manage solutions for end-customers across almost every vertical market. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the Best Places to Work in South Carolina and on FORTUNE magazine’s 2020 List of World’s Most Admired Companies. ScanSource ranks #654 on the Fortune 1000. For more information, visit www.scansource.com.
|
ScanSource, Inc. and Subsidiaries |
||||||||
|
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
|
(in thousands) |
||||||||
|
|
June 30, 2020 |
June 30, 2019 |
||||||
|
Assets |
|
|
||||||
|
Current assets: |
|
|
||||||
|
Cash and cash equivalents |
$ |
29,485 |
|
$ |
19,305 |
|
||
|
Accounts receivable, less allowance of $21,906 at June 30, 2020 and $27,521 at June 30, 2019 |
|
443,185 |
|
|
523,424 |
|
||
|
Inventories |
|
454,885 |
|
|
554,080 |
|
||
|
Prepaid expenses and other current assets |
|
94,681 |
|
|
83,753 |
|
||
|
Current assets held for sale |
|
181,231 |
|
|
296,753 |
|
||
|
Total current assets |
|
1,203,467 |
|
|
1,477,315 |
|
||
|
Property and equipment, net |
|
55,641 |
|
|
60,570 |
|
||
|
Goodwill |
|
214,288 |
|
|
310,715 |
|
||
|
Identifiable intangible assets, net |
|
121,547 |
|
|
121,214 |
|
||
|
Deferred income taxes |
|
24,630 |
|
|
15,447 |
|
||
|
Other non-current assets |
|
72,521 |
|
|
52,921 |
|
||
|
Non-current assets held for sale |
|
— |
|
|
29,079 |
|
||
|
Total assets |
$ |
1,692,094 |
|
$ |
2,067,261 |
|
||
|
Liabilities and Shareholders’ Equity |
|
|
||||||
|
Current liabilities: |
|
|
||||||
|
Accounts payable |
$ |
454,240 |
|
$ |
488,291 |
|
||
|
Accrued expenses and other current liabilities |
|
76,686 |
|
|
64,629 |
|
||
|
Current portion of contingent consideration |
|
46,334 |
|
|
38,393 |
|
||
|
Income taxes payable |
|
5,886 |
|
|
3,956 |
|
||
|
Short-term borrowings |
|
— |
|
|
— |
|
||
|
Current portion of long-term debt |
|
7,839 |
|
|
4,085 |
|
||
|
Current liabilities held for sale |
|
128,022 |
|
|
101,532 |
|
||
|
Total current liabilities |
|
719,007 |
|
|
700,886 |
|
||
|
Deferred income taxes |
|
3,884 |
|
|
— |
|
||
|
Long-term debt, net of current portion |
|
143,175 |
|
|
151,014 |
|
||
|
Borrowings under revolving credit facility |
|
67,714 |
|
|
172,390 |
|
||
|
Long-term portion of contingent consideration |
|
— |
|
|
39,532 |
|
||
|
Other long-term liabilities |
|
80,068 |
|
|
57,153 |
|
||
|
Long-term liabilities held for sale |
|
— |
|
|
32,157 |
|
||
|
Total liabilities |
|
1,013,848 |
|
|
1,153,132 |
|
||
|
Commitments and contingencies |
|
|
||||||
|
Shareholders’ equity: |
|
|
||||||
|
Preferred stock, no par value; 3,000,000 shares authorized, none issued |
|
— |
|
|
— |
|
||
|
Common stock, no par value; 45,000,000 shares authorized, 25,361,298 and 25,408,397 shares issued and outstanding at June 30, 2020 and June 30, 2019, respectively |
|
63,765 |
|
|
64,287 |
|
||
|
Retained earnings |
|
747,276 |
|
|
939,930 |
|
||
|
Accumulated other comprehensive loss |
|
(132,795 |
) |
|
(90,088 |
) |
||
|
Total shareholders’ equity |
|
678,246 |
|
|
914,129 |
|
||
|
Total liabilities and shareholders’ equity |
$ |
1,692,094 |
|
$ |
2,067,261 |
|
||
|
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
|
Condensed Consolidated Income Statements (Unaudited) |
|||||||||||||||
|
(in thousands, except per share data) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter ended June 30, |
|
Fiscal year ended June 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
Net sales |
$ |
636,450 |
|
|
$ |
811,432 |
|
|
$ |
3,047,734 |
|
|
$ |
3,249,799 |
|
|
Cost of goods sold |
|
562,303 |
|
|
|
714,789 |
|
|
|
2,692,165 |
|
|
|
2,856,996 |
|
|
Gross profit |
|
74,147 |
|
|
|
96,643 |
|
|
|
355,569 |
|
|
|
392,803 |
|
|
Selling, general and administrative expenses |
|
58,192 |
|
|
|
62,923 |
|
|
|
260,139 |
|
|
|
252,948 |
|
|
Depreciation expense |
|
3,304 |
|
|
|
2,952 |
|
|
|
13,033 |
|
|
|
12,028 |
|
|
Intangible amortization expense |
|
4,946 |
|
|
|
4,542 |
|
|
|
19,953 |
|
|
|
17,893 |
|
|
Impairment charges |
|
120,470 |
|
|
|
— |
|
|
|
120,470 |
|
|
|
— |
|
|
Change in fair value of contingent consideration |
|
674 |
|
|
|
3,666 |
|
|
|
6,941 |
|
|
|
15,200 |
|
|
Operating (loss) income |
|
(113,439 |
) |
|
|
22,560 |
|
|
|
(64,967 |
) |
|
|
94,734 |
|
|
Interest expense |
|
2,497 |
|
|
|
3,851 |
|
|
|
12,224 |
|
|
|
13,162 |
|
|
Interest income |
|
(3,199 |
) |
|
|
(446 |
) |
|
|
(5,826 |
) |
|
|
(1,818 |
) |
|
Other expense (income), net |
|
213 |
|
|
|
22 |
|
|
|
411 |
|
|
|
(247 |
) |
|
(Loss) Income before income taxes |
|
(112,950 |
) |
|
|
19,133 |
|
|
|
(71,776 |
) |
|
|
83,637 |
|
|
Provision for income taxes |
|
(4,091 |
) |
|
|
3,137 |
|
|
|
7,451 |
|
|
|
18,778 |
|
|
Net (loss) income from continuing operations |
|
(108,859 |
) |
|
|
15,996 |
|
|
|
(79,227 |
) |
|
|
64,859 |
|
|
Net loss from discontinued operations |
|
(108,403 |
) |
|
|
(4,418 |
) |
|
|
(113,427 |
) |
|
|
(7,262 |
) |
|
Net (loss) income |
$ |
(217,262 |
) |
|
$ |
11,578 |
|
|
$ |
(192,654 |
) |
|
$ |
57,597 |
|
|
Per share data: |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net (loss) income from continuing operations per common share, basic |
$ |
(4.29 |
) |
|
$ |
0.62 |
|
|
$ |
(3.12 |
) |
|
$ |
2.53 |
|
|
Net loss from discontinued operations per common share, basic |
|
(4.28 |
) |
|
|
(0.17 |
) |
|
|
(4.47 |
) |
|
|
(0.28 |
) |
|
Net (loss) income per common share, basic |
$ |
(8.57 |
) |
|
$ |
0.45 |
|
|
$ |
(7.59 |
) |
|
$ |
2.25 |
|
|
Weighted-average shares outstanding, basic |
|
25,353 |
|
|
|
25,627 |
|
|
|
25,378 |
|
|
|
25,642 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net (loss) income from continuing operations per common share, diluted |
$ |
(4.29 |
) |
|
$ |
0.62 |
|
|
$ |
(3.12 |
) |
|
$ |
2.52 |
|
|
Net loss from discontinued operations per common share, diluted |
|
(4.28 |
) |
|
|
(0.17 |
) |
|
|
(4.47 |
) |
|
|
(0.28 |
) |
|
Net (loss) income per common share, diluted |
$ |
(8.57 |
) |
|
$ |
0.45 |
|
|
$ |
(7.59 |
) |
|
$ |
2.24 |
|
|
Weighted-average shares outstanding, diluted |
|
25,353 |
|
|
|
25,691 |
|
|
|
25,378 |
|
|
|
25,734 |
|
|
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||||||||||
|
(in thousands) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter ended June 30, |
|
Fiscal year ended June 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
|
Net (loss) income |
$ |
(217,262 |
) |
|
$ |
11,578 |
|
|
$ |
(192,654 |
) |
|
$ |
57,597 |
|
|
Net loss from discontinued operations |
|
(108,403 |
) |
|
|
(4,418 |
) |
|
|
(113,427 |
) |
|
|
(7,262 |
) |
|
Net (loss) income from continuing operations |
|
(108,859 |
) |
|
|
15,996 |
|
|
|
(79,227 |
) |
|
|
64,859 |
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations: |
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization |
|
8,743 |
|
|
|
8,321 |
|
|
|
35,328 |
|
|
|
33,652 |
|
|
Provision for doubtful accounts |
|
222 |
|
|
|
(1,197 |
) |
|
|
1,621 |
|
|
|
1,712 |
|
|
Share-based compensation |
|
1,425 |
|
|
|
1,210 |
|
|
|
5,478 |
|
|
|
6,045 |
|
|
Impairment charges |
|
120,470 |
|
|
|
— |
|
|
|
120,470 |
|
|
|
— |
|
|
Deferred income taxes |
|
(10,714 |
) |
|
|
(3,698 |
) |
|
|
(12,193 |
) |
|
|
(2,757 |
) |
|
Change in fair value of contingent consideration |
|
674 |
|
|
|
3,666 |
|
|
|
6,941 |
|
|
|
15,200 |
|
|
Contingent consideration payments excess |
|
— |
|
|
|
— |
|
|
|
(3,050 |
) |
|
|
(10,190 |
) |
|
Other |
|
125 |
|
|
|
98 |
|
|
|
502 |
|
|
|
350 |
|
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
||||||||
|
Accounts receivable |
|
57,562 |
|
|
|
(38,060 |
) |
|
|
57,477 |
|
|
|
(5,490 |
) |
|
Inventories |
|
93,623 |
|
|
|
61,948 |
|
|
|
86,177 |
|
|
|
(85,862 |
) |
|
Prepaid expenses and other assets |
|
(2,903 |
) |
|
|
(14,657 |
) |
|
|
(13,880 |
) |
|
|
(10,091 |
) |
|
Other non-current assets |
|
(12,534 |
) |
|
|
(2,545 |
) |
|
|
(13,563 |
) |
|
|
(2,438 |
) |
|
Accounts payable |
|
(76,224 |
) |
|
|
(5,622 |
) |
|
|
(20,846 |
) |
|
|
16,134 |
|
|
Accrued expenses and other liabilities |
|
(1,992 |
) |
|
|
6,118 |
|
|
|
11,239 |
|
|
|
2,377 |
|
|
Income taxes payable |
|
4,334 |
|
|
|
2,873 |
|
|
|
(441 |
) |
|
|
(7,469 |
) |
|
Net cash provided by operating activities of continuing operations |
|
73,952 |
|
|
|
34,451 |
|
|
|
182,033 |
|
|
|
16,032 |
|
|
Cash flows from investing activities of continuing operations: |
|
|
|
|
|
|
|
||||||||
|
Capital expenditures |
|
188 |
|
|
|
4,093 |
|
|
|
(6,387 |
) |
|
|
(5,797 |
) |
|
Cash paid for business acquisitions, net of cash acquired |
|
— |
|
|
|
— |
|
|
|
(48,921 |
) |
|
|
(32,161 |
) |
|
Net cash used in investing activities of continuing operations |
|
188 |
|
|
|
4,093 |
|
|
|
(55,308 |
) |
|
|
(37,958 |
) |
|
Cash flows from financing activities of continuing operations: |
|
|
|
|
|
|
|
||||||||
|
Borrowings on revolving credit, net of expenses |
|
477,446 |
|
|
|
458,522 |
|
|
|
2,085,918 |
|
|
|
2,061,090 |
|
|
Repayments on revolving credit, net of expenses |
|
(539,732 |
) |
|
|
(611,877 |
) |
|
|
(2,190,595 |
) |
|
|
(2,132,702 |
) |
|
Borrowings on long-term debt, net |
|
(938 |
) |
|
|
150,000 |
|
|
|
(4,085 |
) |
|
|
149,670 |
|
|
Repayments of finance lease obligations |
|
(1,105 |
) |
|
|
(166 |
) |
|
|
(1,765 |
) |
|
|
(662 |
) |
|
Debt issuance costs |
|
— |
|
|
|
(1,096 |
) |
|
|
— |
|
|
|
(1,096 |
) |
|
Contingent consideration payments |
|
— |
|
|
|
— |
|
|
|
(35,482 |
) |
|
|
(35,606 |
) |
|
Exercise of stock options |
|
— |
|
|
|
— |
|
|
|
754 |
|
|
|
1,509 |
|
|
Taxes paid on settlement of equity awards |
|
— |
|
|
|
— |
|
|
|
(1,353 |
) |
|
|
(1,406 |
) |
|
Repurchase of common stock |
|
— |
|
|
|
(9,176 |
) |
|
|
(6,078 |
) |
|
|
(9,483 |
) |
|
Net cash (used in) provided by financing activities of continuing operations |
|
(64,329 |
) |
|
|
(13,793 |
) |
|
|
(152,686 |
) |
|
|
31,314 |
|
|
|
|||||||||||||||
|
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
|
Condensed Consolidated Statements of Cash Flows (Unaudited), continued |
|||||||||||||||
|
(in thousands) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Cash flows from discontinued operations: |
|
|
|
|
|
|
|
||||||||
|
Net cash flows provided by (used in) operating activities of discontinued operations |
|
2,235 |
|
|
|
(37,031 |
) |
|
|
44,238 |
|
|
|
(43,159 |
) |
|
Net cash flows (used in) provided by investing activities of discontinued operations |
|
(35 |
) |
|
|
(330 |
) |
|
|
(77 |
) |
|
|
(1,416 |
) |
|
Net cash flows (used in) provided by financing activities of discontinued operations |
|
(10,663 |
) |
|
|
15,748 |
|
|
|
(3,921 |
) |
|
|
32,917 |
|
|
Net cash flows provided by (used in) discontinued operations |
|
(8,463 |
) |
|
|
(21,613 |
) |
|
|
40,240 |
|
|
|
(11,658 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(1,489 |
) |
|
|
280 |
|
|
|
(3,642 |
) |
|
|
558 |
|
|
Increase (decrease) in cash and cash equivalents |
|
(141 |
) |
|
|
3,418 |
|
|
|
10,637 |
|
|
|
(1,712 |
) |
|
Consolidated cash and cash equivalents at beginning of period |
|
34,596 |
|
|
|
20,400 |
|
|
|
23,818 |
|
|
|
25,530 |
|
|
Consolidated cash and cash equivalents at end of period |
|
34,455 |
|
|
|
23,818 |
|
|
|
34,455 |
|
|
|
23,818 |
|
|
Cash and cash equivalents of discontinued operations |
|
4,970 |
|
|
|
4,513 |
|
|
|
4,970 |
|
|
|
4,513 |
|
|
Cash and cash equivalents of continuing operations |
$ |
29,485 |
|
|
$ |
19,305 |
|
|
$ |
29,485 |
|
|
$ |
19,305 |
|
|
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
|
Supplementary Information (Unaudited) |
|||||||||||||||
|
(in thousands, except percentages) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Non-GAAP Financial Information: |
|
|
|
||||||||||||
|
|
Quarter ended June 30, |
|
Fiscal year ended June 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
Return on invested capital ratio (ROIC), annualized (a) |
|
4.0 |
% |
|
|
11.2 |
% |
|
|
7.5 |
% |
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
Reconciliation of net income to EBITDA: |
|
|
|
|
|
|
|
||||||||
|
Net (loss) income from continuing operations (GAAP) |
$ |
(108,859 |
) |
|
$ |
15,996 |
|
|
$ |
(79,227 |
) |
|
$ |
64,859 |
|
|
Plus: Interest expense |
|
2,497 |
|
|
|
3,851 |
|
|
|
12,224 |
|
|
|
13,162 |
|
|
Plus: Income taxes |
|
(4,091 |
) |
|
|
3,137 |
|
|
|
7,451 |
|
|
|
18,778 |
|
|
Plus: Depreciation and amortization |
|
8,743 |
|
|
|
8,321 |
|
|
|
35,328 |
|
|
|
33,652 |
|
|
EBITDA (non-GAAP) |
|
(101,710 |
) |
|
|
31,305 |
|
|
|
(24,224 |
) |
|
|
130,451 |
|
|
Plus: Change in fair value of contingent consideration |
|
674 |
|
|
|
3,666 |
|
|
|
6,941 |
|
|
|
15,200 |
|
|
Plus: Acquisition and divestiture costs |
|
1,311 |
|
|
|
230 |
|
|
|
4,000 |
|
|
|
1,218 |
|
|
Plus: Restructuring costs |
|
— |
|
|
|
— |
|
|
|
604 |
|
|
|
— |
|
|
Plus: Impairment charges |
|
120,470 |
|
|
|
— |
|
|
|
120,470 |
|
|
|
— |
|
|
Plus: Tax reform and settlement, includes interest income |
|
(8,424 |
) |
|
|
— |
|
|
|
(10,744 |
) |
|
|
— |
|
|
Adjusted EBITDA (numerator for ROIC) (non-GAAP) |
$ |
12,321 |
|
|
$ |
35,201 |
|
|
$ |
97,047 |
|
|
$ |
146,869 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Invested Capital Calculation |
|
|
|
|
|
|
|
||||||||
|
Equity – beginning of the period |
$ |
897,678 |
|
|
$ |
911,063 |
|
|
$ |
914,129 |
|
|
$ |
866,376 |
|
|
Equity – end of the period |
|
678,246 |
|
|
|
914,129 |
|
|
|
678,246 |
|
|
|
914,129 |
|
|
Plus: Change in fair value of contingent consideration, net of tax |
|
510 |
|
|
|
2,780 |
|
|
|
5,247 |
|
|
|
11,294 |
|
|
Plus: Acquisition and divestiture costs |
|
1,311 |
|
|
|
230 |
|
|
|
4,000 |
|
|
|
1,218 |
|
|
Plus: Restructuring, net of tax |
|
— |
|
|
|
— |
|
|
|
449 |
|
|
|
— |
|
|
Plus: Impairment charges, net |
|
114,398 |
|
|
|
— |
|
|
|
114,398 |
|
|
|
— |
|
|
Plus: Tax recovery, net |
|
(6,247 |
) |
|
|
(3,110 |
) |
|
|
(8,001 |
) |
|
|
(3,110 |
) |
|
Plus: Impact of discontinued operations, net of tax |
|
98,794 |
|
|
|
(16,557 |
) |
|
|
98,794 |
|
|
|
(16,557 |
) |
|
Average equity |
|
892,345 |
|
|
|
904,268 |
|
|
|
903,631 |
|
|
|
886,675 |
|
|
Average funded debt(b) |
|
337,973 |
|
|
|
355,932 |
|
|
|
390,709 |
|
|
|
329,473 |
|
|
Invested capital (denominator for ROIC) (non-GAAP) |
$ |
1,230,318 |
|
|
$ |
1,260,200 |
|
|
$ |
1,294,340 |
|
|
$ |
1,216,148 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
(a) Calculated as earnings before interest expense, income taxes, depreciation and amortization (EBITDA), plus change in fair value of contingent consideration and other adjustments, annualized and divided by invested capital for the period. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. |
|||||||||||||||
|
(b) Average funded debt, which includes both continuing and discontinued operations, is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt. |
|||||||||||||||
Contacts
Gerald Lyons
Executive Vice President, Chief Financial Officer
ScanSource, Inc.
(864) 286-4854
– or –
Mary M. Gentry
Vice President, Treasurer and Investor Relations
ScanSource, Inc.
(864) 286-4892
